Hedge Fund Views of the Market | Notes

Hedge Fund Views

Hedge Fund Views of the Market

I just found this post on a few views of what is currently happening to hedge funds.

I think hedge funds are in trouble and some are failing as we write these posts. The industry as a whole though will be fine. I think they will emerge twice as strong as they were just a few years ago. Here is the post excerpt:

What happened to the global economy and what we can do about it
Hedge Funds, An Impression

I try to read four newspapers before the day really starts, and also look through a couple of on-line sites. I skim the lead economic stories and randomly dig all the way through the paper to the end of some business/financial stories.

Sometimes the news jumps off the page, and sometimes it seeps through. Now, about two hours after looking at today’s weekend papers, I realize that something is stuck in my mind, rather like a tune that you can’t get rid of.

I read, in at least two places, various versions of the following proposition.

1. Hedge Funds, if they get into trouble, will not be rescued by the government

2. Big Hedge Funds are not in trouble

Statement #1 is presumably false. There is no way that any responsible government could let a large Hedge Fund fail at this point. The system is too fragile and the risks too obvious. In fact, the Europeans ratcheted up the pressure in this regard during the week, with their increasingly undiplomatic condemnations of the US for not saving Lehman. (Just wait until they figure out what really happened in the “rescue” of AIG.)

Statement #2 is interesting. I’m not taking a view either way on this; I much prefer to be agnostic and see what the data bring in. But I did note a story that mentioned that the US government had been asking financial institutions about their exposure to particular (named in the story) Hedge Funds. Source

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